Strategic Purchasing

Strategic purchasing fundamentally aims to align funding and incentives with intended health services. This is achieved by linking the allocation of pooled funds to services / providers, at least in part, to information on population needs / priority interventions, or aspects of provider performance. Strategic purchasing also exists as a fundamental healthcare financing reform to accelerate progress towards Universal Health Coverage (UHC).

Typically, a passive approach to healthcare financing has generally been adopted, where funding allocations are made primarily on the basis of historical expenditure, and independent of key factors relating to provider performance, population needs or priority health interventions. By incorporating the aforementioned factors into decisions relating to funding allocations, strategic, also referred to as active purchasing, makes provision to enhance equity in the distribution of resources, increase efficiency, manage expenditure growth and promote quality in health care service delivery.

It is important to note however that strategic purchasing does not require a radical shift but rather a continuum from passive to active purchasing through the expansion of critical factors considered in the allocation of funds for healthcare services.  

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